Skilled nursing care costs a great deal of money, and the subject causes serious anxiety among retirees, financial planners, caregivers, and others. In Texas, Medicaid for the Elderly and People with Disabilities ("Medicaid" used here for convenience and only as applied in Texas) provides assistance for certain individuals who require skilled nursing and need assistance paying for it.
This post outlines the most prominent Medicaid requirements for a single person, although many of the same rules apply to a married applicant as well. The devil as always lies in the details, so it is important to keep in mind while reading this post that other rules and regulations may apply depending on the applicant's unique circumstances.
Keep in mind as well that nothing that follows constitutes legal advice or implies an attorney-client relationship with anyone. This post is strictly educational, and anyone considering applying for Medicaid assistance should contact an elder law attorney - even if the nursing home offers to do the application for free.
A single person over 65, or younger if disabled, whose medical needs require the attention of a medical professional on a continuous basis in an institutional setting may apply for assistance for those needs if that person meets certain additional requirements.
For the first additional requirement, the person applying for long term skilled nursing care must reside in a 'Medicaid bed' in a skilled nursing facility. Specifically, Medicaid approves a certain number of beds for a given facility, the person has to reside in such a facility, and the facility has to assign one of those Medicaid beds to the person. Also, the person has to occupy that bed for at least 30 days for his or her application to become effective.
The next additional requirements are financial: The person''s gross monthly income cannot exceed $2,349 per month, and the person must have less than $2,000 in countable resources or assets.
Both financial requirements need a little breaking down. In broad terms Medicaid calculates the gross income from all sources by adding back to the net income all deductions including Medicare and other health insurance premiums and taxes withheld.
With certain exclusions, the applicant has to use his or her income to pay for his or her long term care. Assuming no dependents, a single person keeps a $60 monthly allowance and enough income to cover Medicare and other monthly health insurance premiums. Normally, Social Security deducts the Medicare premium from the person's monthly check. The person then applies the remainder to the nursing home bill as a copay. Medicaid refers to the copay as the Applied Income.
Exceeding the income limit rarely keeps an person from eligibility. If the person has too much income, the person creates a Qualified Income Trust or QIT (also known as a Miller Trust) and the trustee opens a bank account in the name of the trust. Medicaid does not count income that has properly passed through the QIT account. So for a simple example, suppose a person receives $2,400 per month from Social Security and has a $300 per month Medicare supplement. If the person transfers the $2,400 to the QIT account, the trustee pays the person $60 for his or her monthly allowance, pays the insurance premium, and then pays the nursing home the difference of $2,040. If all that is done in the same month, Medicaid acts as if the person had $0 income for that month.
In addition to the income limit, Medicaid has an asset limit, but to understanding that requires some definitions. First, Medicaid refers to property owned by the person, real and personal, as 'resources'. Second, Medicaid recognizes 'countable resources' which count towards the $2,000 countable resource limit and 'exempt resources' which do not. Typical exempt resources include a residence, a car, an IRA's, and an irrevocable pre-need funeral contract; pretty much everything else counts.
Medicaid determines eligibility at the beginning of the month, so a person applying for assistance in June must have a monthly gross income of less than $2,349 and countable resources of less than $2,000 at the end of May. To keep his or her eligibility, the person's monthly income must remain below $2,349, and the person has to have less than $2,000 in countable resources at the end of each month to remain eligible for the next month.
Future posts will address specific issues such as married applicants identifying resources, spending down resources to become eligible, gifting, and other problems that can arise when someone applies to Medicaid for nursing home assistance.